Investment Senario In India

INVESTMENT SCENARIO IN INDIA PRESENTORS:   B.B.D.I.T. GHAZIABAD    

DIWAKAR CHATURVEDI [email protected] 09456631311

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Introduction •

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India is the 4th largest economy and has the 2nd GDP among developing countries. India is poised for growth with macro –economic stability and by 2025 Indian economy is projected to be about 60% in size of the US economy. In this post we try to analyze current scenario of investment in 3 core sectors: (1) Infrastructure, (2) Education and (3) Security

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Infrastructure Investment… • India has emerged as land of opportunities for infrastructure sector. • For emerging economy like India, with more than a billion people, infrastructure, which provides essential services, also reflects reliability, assurance, low-cost production, and market competitiveness. • In the last few years a number of Road Projects have been taken up under ambitious National Highway Development Programme costing about US$ 12 billion. For infrastructure we have taken following sectors   The transport business Roads Airport The telecom

Ports Railways Urban Infrastructure 3

The transport business…. Number of private transport projects with government payments, 2007-08 Countries

Transport projects with government payments

Total

Brazil

1

4

Ecuador

2

5

Chile

1

3

Colombia

1

7

Hungary

1

2

50

97

Mexico

7

21

Peru

8

10

South Africa

1

1

72

150

India

Total

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RAILWAYS The Indian Railway is one of the largest railway systems in the world under a single management and manages more than 63,000 km of railway tracks. The Government of India has offered over 500 acres of land to private developer across the country for the development of railway stations, fright terminals and rail link projects.

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 Railways had a surplus of25,000 crores in last financial year.  The profit was 90000 crores in 2008–09.  The annual plan for investment in 2009-10 is 37,905 crore.  Railway has the monopoly in freight and passenger trains there is an enormous strain on the existing network of rail tracks. So government of India has decided to invest about $ 5 billion to enhance the rail routes in India.  With private container operations starting to become a reality, internal transport efficiency will have knitted domestic 6 markets together like never before.

AIRPORTS  There are 126 airports in India that are owned and operated by the Airport Authority of India. These include five airports in the major metros that account for the majority of traffic.  The Airport Authority of India had invested about Rs 1500 crore to modernize at least ten non-metro airports in the country in 2008. 7

 By the way of incentives 100% tax exemption for air port projects for10 years.  100% FDI is permitted for Greenfield airports under the automatic route.  A high demand for investments in aviation infrastructure is estimated to about US$ 9 billion for airport development over the next 5 years. A greenfield airport is one where a private entity or a public-private joint venture builds and operates a new facility, entering into Build-OwnTransfer (BOT) or Build-Own-Contracts (BOC).

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URBAN INFRASTRUCTURE The success of the Delhi Metro Rail has prompted a few mega-cities to make determined efforts to have metro rail as mass rapid transit system. India is now being the country of the cities. The increasing urbanization is the opportunity for the private investment. 9

Alone in Delhi we can see…

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THE TELECOM The telecom industry is one of the fastest growing industries in India. With 4.5 to 5 million new telephone connections being given out every month, Phone ownership is growing rapidly in India. India has nearly 200 million telephone lines making it the third largest network in the world. 11

 After China and USA with growth rate of 45%, Indian telecom industry has the highest growth rate in the world. • TRAI issued a consultation paper again on ‘Issues relating to Convergence and Competition in Broadcasting and Telecommunications' to resume the debate on convergence. • Government of India permits 100% FDI in telecom equipment manufacturing. • 74%-100% FDI is allowed in various telecom services. • Govt. has appointed a committee to design unified and single levy in telecom sector. • 150% growth has been expected by govt. in telecom so investment opportunity of $ 22 billion is being offered to foreign and /or private players. 12

PORTS India has 12 major ports and 187 minor ports along its extensive coastline. The major, ports, that handle about 74% of the total traffic handled cargo of over 463 million tones in the last fiscal year, which was an increase of 9.5% over the previous year.

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 Under the automatic route 51% foreign equity is permitted.  74% FDI is permitted in construction and maintenance of ports and harbors.  100% FDI under the automatic route is permitted for port development projects.  There is no tax payable for a period of 10 years on development investments.

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Roads India has a road network of 3.3 million kilometers which is the second largest in the world. Roads carry about 65% of fright and 80% of passenger traffic. But their quality and extent is not adequate Government of India with and incentive to increase the investment in highways and roads has granted a 100% income tax exemption for a period of 10 years for all road development projects.

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Present meltdown… • In the present economic crisis when all sectors are facing the heat of downturn, infrastructure sector comes with no exceptions. • The major hindrance coming in way of growth of this sector is scarcity of funds. • In recently announced fiscal package by government, in order to boost investment in the infrastructure sector, the government authorized the state-run India Infrastructure Finance Co. Ltd (IIFCL) to raise Rs.100 billion through taxfree bonds by next March.

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INVESTMENT SENARIO IN PRIVATE EDUCATION IN INDIA… .

Indian education system has witnessed an impressive growth path since independence. From just 0.1 million in 1947, enrollments in the country have grown to more than 11 million in 200506. Despite the fact of rising enrolment figures, the cumulative expenditure of states on educational services as a % of total expenditure has shown a decline of 18% in 2007-08.

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Per capita fund flow to education in 2007-08 was…

state

In Rs.

Uttar Pradesh

483

Bihar

487

Maharashtra

1034

Kerala

1034

Himachal Pradesh

1777 18

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Boom in the Security Industry… Private security in India will become a Rs 50,000 crore (Rs 500 billion) industry in four years as corporate have increased their spending on safeguards after the Mumbai terror strikes. The increasing terror, developing infrastructure like malls, colleges, buildings, public places are enhancing the demand of private security guards.

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 The private security business, a Rs 22,000 crore (Rs 220 billion) industry now, would touch Rs 50,000 crore as security all of a sudden has become top priority for Indian Inc.  Terrorism now is a universal phenomenon and most countries are facing it.

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The occupation project and the wage prospects are…. Occupati on

1998 Employm ent

Projected Projected Wage 2008 Annual Range Employm Openings ent

Median Wage

Guards

61,920

75,140

2,870

$6.75$12.39

$8.46

Janitors & cleaners

84,970

92,140

2,560

$9.16$15.29

$12.84

Cleaning & 18,530 building service workers, n.e.c

17,930

390

$10.43$14.34

$12.72

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Conclusion… After going through the data and figures in the infrastructure, education and security in the Indian market, it is clearer that even in this tough time India has a lot of opportunities for the investment and growth in a number of fields which shows that we are not much effected by the global meltdown as other countries around the globe are.

Thanks.

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